Self-Driving Cars: Are We Ready?

Self-Driving Cars:

Are We Ready?



A message from Gary Silberg

A year ago, KPMG's Automotive team released a white paper about self-driving vehicles. That report, Self-Driving Cars: The Next Revolution, focused on the emerging technologies and the profound impact self-driving vehicles could have in reshaping our roads, our cities and our lives.1

A year later the momentum around self-driving vehicles is astonishing. In some ways, the industry is moving even faster than we predicted. Rarely does a day go by without another announcement about a new technological breakthrough or a new joint venture. Traditional automotive manufacturers are teaming up with high tech companies; innovative start-ups are seeking and finding investors. The landscape is shifting before our eyes.

But the introduction of disruptive innovation is fraught with risks. No matter how great the potential of self-driving vehicles, its trajectory will be determined by markets. And those markets are composed of people--consumers--who will ultimately adopt or reject the technology.

So this year, KPMG LLP went directly to consumers to ask the all-important question: If selfdriving vehicles were available and safe, would you use them?

We conducted focus groups with vehicle owners in Los Angeles, California; Chicago, Illinois; and Iselin, New Jersey. We also leveraged insights into current sentiment about self-driving technologies using KPMG's Mass Opinion Business Intelligence (MOBITM) capability. Our research yielded three important insights into when, why and how consumers might use self-driving vehicles.

1. There's a distinct self-driving value proposition. Get it right and consumers will clamor (and pay) for the technology.

2. Get ready for the post-powertrain ecosystem. Acceleration time from 0?60 mph may not matter in the self-driving era. Consumers might well buy their self-driving cars from hightech companies.

3.The growth in self-driving mobility on demand services could mark the end of the two-car family.

The report that follows discusses our findings and the implied opportunities and risks ahead for everyone within the automotive ecosystem. We hope you find the report illuminating and that we will have a chance to discuss our findings with you in the near future.

Gary Silberg Partner, KPMG LLP National Industry Leader Automotive

Self-Driving Cars: Are We Ready?

A Glimpse Into the Future

Gaze out at the automotive horizon and you can almost see a new era coming into focus: the age of self-driving cars. An age when humans will no longer need to keep their eyes on the road. No more concerns about distracted driving or those dreaded rush hour commutes. Vehicles will whisk us where we want to go, quickly and efficiently, then scurry away.

Or not.

Ultimately, the shape of the automotive future will depend on consumers--their needs, preferences, fears--and their pocketbooks. Will they trust these new vehicles? Buy them? Rent them by the hour or by the trip? Will people still need to own or lease their own vehicles? Will human operated vehicles become as rare as film cameras and record players? What macro-level changes would have to take place first? Would--or should--government mandate new vehicle automation standards? Or should regulators stay out of the way and let market forces prevail?

If self-driving truly becomes the norm, what will we look for in our vehicles? Think about how we differentiate automobile models and brands today: their powertrains, their handling on the road. Will any of that matter in the era of self-driving cars? If not, what will matter? What will future car buyers care about? If we build self-driving cars, will they come?

The answers to those questions could reshape the entire automotive ecosystem: new strategies, new technologies, new entrants in the automotive market, new joint ventures and alliances, new opportunities-- and new risks.

We wanted to know what consumers thought--so we asked. On the pages that follow, we'll introduce you to some of the people who answered.

The Crux of Our Research:Three Insights

1. Focus on Improving Consumers' Quality of Life

While consumers still have many questions about safety, liability and the operation of self-driving cars, their receptivity increased significantly when presented with the right value proposition, which can be summed up as follows: shorter commute times + reduced traffic-related variability + the ability to use the vehicle in either self-driving or humanoperated mode (self-driving on/off) = a strong incentive for consumer adoption.

Companies that get the value proposition right ? and deliver a mobility/driving experience that is esthetically and emotionally pleasing could dominate the market. Companies that miss the mark on either the technology or the mobility experience could find themselves left behind.

2. Prepare for a Radically Different Automotive Ecosystem

In the brave new world of self-driving machines, powertrains may not matter. People may not care how fast a car accelerates from 0-60. Torque? Turbocharged? Really? If you're not driving, what's the big deal? The size and shape of vehicles might change. Consumers might well buy their next car from a hightech company, such as Apple, Microsoft, Samsung, Google or Intel, among others.

The more the concept of mobility is divorced from the experience of driving a car, the wider the door opens for new competitors. Given the size of the market opportunity, there is no doubt that smart innovators and investors will move in.

3. Expect NewThreats and Opportunities from Mobility on Demand Services

Mobility on demand--already a small but growing sector within the transportation industry--could expand significantly, possibly obviating the need for families to purchase more than one vehicle.

The growth of mobility service providers could reshape both demand for vehicles and buying power. If the car you want shows up when you want it, where you want it, does it matter if you own it?

4 The Self-Driving Revolution: Are We Ready?

Meet a Few of Our Participants*

Sean. Dressed in a tee shirt, plaid button down shirt and jeans, Sean exudes a kind of slacker cool. In his late 20s, he lives in Los Angeles with his wife and five-month old daughter. He's a writer; his wife's an actress--the quintessential young show business family.

Hank. A retired executive from Chicago, Hank walks slowly with the aid of a cane, but when he speaks he reveals the nimble intellect of one accustomed to making nuanced, evidence-based decisions. Definitely not the type of person to act on impulse.

Gail. At first glance, Gail is a cross between a soccer mom and a business analyst. Her retro black eyeglasses give her a slightly studious air, but her gut reactions are pure "mama bear." She's a stay-athome mom with a two-year-old daughter. She's all about safety.

Carmella. A striking woman in a fitted black dress and jacket, large hoop earrings and dark hair piled on top of her head, Carmella has the air of an Italian movie star from the 1950s. Based in the New Jersey suburbs, she works as a realtor and says she drives maybe 200 miles a week, mostly in the suburbs. She loves driving--and she loves her car.

Richard. Young, pensive, a commercial plumber from Los Angeles, Richard drives 400 miles a week and rebuilds cars in his spare time. At any given moment he has a few on the blocks. "I love working on cars," he says. "I think the internal combustion motor is the single greatest invention we have--at least in the last 100 years--from where it's taken our civilization."

*We have changed the names and images of our participants to protect their privacy.

The Self-Driving Revolution: Are We Ready? 5

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